Almost everybody could name a favorite place to shop, eat or explore a hobby. Our experience is often enhanced by a nice smile, a warm greeting or an acknowledgement of our preferences. We go back time and time again, and appreciate the little things.
When we are treated rudely, ignored or overlooked, the experience can be quite different. Who has sworn to never visit a particular store or restaurant again?
One of the best ways of connecting to VIP customers, as measured by frequency of visits and generosity of spending, is to simply acknowledge them. Knowing their name, recognizing them with a warm greeting or handling their business quickly according to their preferences are all ways to improve the chances that they will have a great experience.
Studies show that people are not as price-conscious when they perceive benefit to being VIP, changing the ‘lowest-price-always-wins’ game. Again, we can all think of a place where we go and knowingly spend that extra dollar because we like the place, the food, the people, the quality, etc…
Do most Loyalty efforts connect with VIP’s? Studies say most people do not bother to participate in these programs.
A client learned that its listed VIP customers did not come often or spend generously. When compared to those who did, none of them would have made the list. So imagine what happened to its bottom line when it changed the definition of VIP and implemented a strategy to develop its relationship with them? Revenue and profits increased dramatically!
The math is simple. In the case of C-Stores, it could be argued that 8% of customers buy 40% of inside sales (1). These same customers would account for a majority of new sales when properly developed. Hence, acknowledging these 1 in 12 customers would enable a store to aim at those who are most likely to drive new sales. Pursuing “Knowing VIP’s” and making them feel good about your business is a winning strategy.
How a company goes about “Knowing VIP’s” is another part of the strategy. Does the company want to interact with the VIP at the register?
Although inefficient, customer loyalty programs offer some connection with some portion of the VIP’s. Programs’ low participation rate and cross-section of customers ignores the majority of VIP’s. Also, they ignore groupings with family and co-workers to share benefits.
Online commerce yield’s better results, even though they rarely function at the register. Amazon is great at knowing which customers are valuable once the customer starts doing business with it. Other online solutions are good at advertising lower prices and handling products that might be in other stores. However, they do not interact with the customer on a personal level or face to face.
Services, such as Walmart’s New Online Pricing Tool, are even more efficient, as the customer is on Walmart’s servers checking the prices at competing stores. This tool takes a big step towards recognizing the frequent, high-spending customers while they are in the store ready to do business.
EProcess’ “First Choice – VIP” leverages techniques to engage high percentages of VIP customers at the register or door. These were born from efforts to assist clients in spotting and identifying criminals, skimmers and identity fraud, as these same techniques facilitated interaction with VIP’s, the public, and family & friends. Once engaged, it moves those VIP’s who would like to interact with the company to a portal that empowers customers to do business the way they want, while never ceasing to engage the VIP who does not want to use the portal. As part of its strategy, it encourages companies to engage VIP’s in warm, affirmative ways so that the VIP always feels valuable.
The strategy that the company uses to connect with VIP customers will distinguish it from major Universal Commerce players. When all is said and done, the relationship with VIP’s will greatly impact competitive advantage.
In our next discussion, we will address the strategies that Universal Commerce players utilize and the ways that a local company may compete in this ever-changing retail market.
(1) Convenience Stores Industry Snapshot. Center for Economic Vitality. Retrieved October 31, 2013